Facebook stock drops on concerns insiders could flood market

Facebook's stock has disappointed investors who snapped up shares in the social networking company's May 18 IPO.

Starting Thursday, company insiders are cleared to offload their stakes in the empire they built, or they can continue to hold on to their shares for the longer haul. Will they flee the stock or stay?

Facebook Inc. lost $1.20, or 6%, to $20 a share shortly after the opening bell as more than 271 million new shares became eligible to trade in the stock market.

The Dow Jones industrial average and the broader Standard & Poor's 500 index, meanwhile, were down slightly but essentially flat in early trading. The tech-focused Nasdaq was up 5 points, or 0.2%, to 3,035.

Since Facebook's initial public offering of 180 million shares, the company's stock has languished well below its $38 IPO price.

Another 133 million Facebook shares will end a "lockup" period between mid-October and mid-November, according to regulatory filings.

On Nov. 14, another 1.2 billion shares will be available for trading on the stock market, followed by another 149 million the next month and yet another 47 million on the one-year anniversary of the IPO.

As Facebook noted in regulatory filings: "The trading price of the shares of our Class A common stock could decline as a result of the sale of a substantial number of our shares of common stock in the public market or the perception in the market that the holders of a large number of shares intend to sell their shares."